The magnitude of innovation in this era of AI is transforming organizations of all sizes, from law firms to retail shops, government offices to large global companies, and creating new opportunities for our partner ecosystem. Our customers across the globe are relying on partners to help them become more connected to the cloud, integrate AI responsibly and securely into their businesses, and keep them protected from cyber threats. Partners are key to driving exceptional outcomes across the customer journey, not just through a transaction, but with their value-added services and solutions that make those purchases come to life and create real business impact.
Microsoft is committed to being a company that prioritizes customer choice, now and in the future. And customer choice is at the heart of our new commerce evolution. Cloud Solution Providers (CSP) are a vital pillar in meeting customer needs. CSP is our hero motion for driving end-to-end success for small and midsize customers (SMC).
Microsoft estimates based on IDC data, October 2024, that the total addressable market (TAM) for SMC in FY25 is $661 billion ($467 billion of that in cloud solutions) and growing fast with a compound annual growth rate of 15% (20% for cloud) over the next 4 years for companies with fewer than 3,000 employees. Partners are the trusted advisors who unlock business outcomes for these important customers. Equipped with solution designations, partners serve these customers with efficiency and scalability to address their evolving needs, driven by rapid market innovation.
In addition, we are aligning partner incentives across the entire customer life cycle to assist partners in delivering value and developing sustainable, profitable businesses to serve these SMC customers. In FY25, we boosted our incentives to 70% of our total partner investment spend for partners serving SMC customers. This spans across our portfolio of six commercial solution areas, enabling our partners to deliver customer value across our entire platform.
Evolution of enterprise commerce strategy
Beginning January 1, 2025, a small percentage of cloud Enterprise Agreements (EA) in direct markets will no longer be eligible for renewal under the existing EA framework. In January 2025, we will begin notifying these affected customers that renewal on the EA is no longer possible. For enterprise customers, the Microsoft Customer Agreement for enterprise (MCA-E, the digital evolution of the traditional EA), will provide the optimal, streamlined solution. For SMC customers, the recommended options are CSP or MCA-E. Customers seeking a value-added services and support experience through a partner should choose CSP. Customers seeking a direct purchasing relationship with Microsoft or who prefer to manage their own per-user purchases should select MCA-E. With partners leading the way, customers can navigate these changes with confidence, knowing they are fully supported in their path to growth.
As our enterprise commerce strategy continues to evolve, we are also evolving our enterprise incentive offerings. Partners play a very strategic role with our enterprise customers beyond the transaction of enterprise agreements. For partners to meet customers’ evolving needs in the era of AI, the focus must shift to a customer-centric approach with value-added services that enable customer growth and success. Partners will continue to earn incentives when transacting EA renewals and driving upsell and can earn additional incentives through other outcome-based opportunities for strategic customer scenarios.
Enabling partners to serve public customers
We understand the unique requirements and expertise needed for partners when selling Microsoft cloud products, especially to public customers. To address this, we are updating the Maximum Resale Price (MRP) calculation formula in channel partner agreements that support volume licensing. The new MRP formula is scheduled to go into effect for all Microsoft products in July 2025.
Providing more payment flexibility
We are continually refining our offers and investments to help partners meet the needs of customers. Beginning on December 1, 2024, we are introducing a new monthly billing plan for annual subscriptions of Microsoft 365 Copilot, Microsoft 365 Copilot for Sales, and Microsoft 365 Copilot for Services. This new monthly billing option for annual subscriptions will be priced 5% higher than the annual billing (upfront payment) option for annual subscription plans.
We will standardize the billing structure by introducing a pricing update starting on April 1, 2025, for all other products with per-user monthly billing plans for annual subscriptions across all new commerce purchasing motions—direct online, through CSP or MCA-E. This price update will apply to all new and renewing monthly billing plans for annual subscriptions. You can learn more in this blog post and the FAQ.
Helping partners get customers AI ready
We are excited to share a new promotion to help partners get customers AI ready with Microsoft 365 E5—offering productivity apps with advanced security, compliance and analytics capabilities.
Beginning January 1, 2025, partners can receive 15% off the net price of Microsoft 365 E5 annual commitment subscriptions for eligible customers. This promotion will be available worldwide for new-to-offer customers, for subscriptions between 1–2,400 licenses.
The offer will be available through June 30, 2025, and more information will be available in the Global Promo Readiness Guide on January 1.
Strengthening our commitment to partners in the AI era
We’ve always been committed to empowering our customers and partners as they navigate the evolving landscape of technology. With the rapid advancement of AI, this commitment has never been more important. We’ve listened closely to the questions and feedback from our partners regarding selling and deploying AI offerings and we are pleased to announce that, building on our Copilot Copyright Commitment that we introduced for customers (CCC) last year, we are extending our CCC to include our reseller partners, both as customers and in support of their end customers. This means that our resellers can assure their customers that they will receive the same CCC protections as customers who purchase qualifying Copilot offerings directly from Microsoft.
Over the next several months, we will be updating the relevant reseller agreements, for both existing and new resellers, to include CCC protection for qualifying claims. This means that partners can focus on delivering value without the fear of unreasonable litigation costs related to qualifying CCC claims. We are also creating a simplified partner and customer experience for submitting and managing qualifying CCC claims. Details on the updated process will be available in the coming months.
Microsoft is a partner-led company
For more than 40 years, Microsoft has relied on you, our partner ecosystem, to reach and connect with customers of all sizes, empowering them to succeed with Microsoft solutions. While technologies, buying paths, and customer opportunities evolve, what remains true is the power of partnership. Our shared objective remains constant—enhancing the customer experience while delivering sustained value throughout the entire customer journey.
Partners play an instrumental role in enabling customers to transform their businesses through the power of AI. It is truly inspiring to see the impact that our partners are having on industries, countries, communities, and businesses of all sizes. I look forward to our continued partnership as we work together to realize our mission of empowering every person and organization on the planet to achieve more.